"Here I am again Mr (Tony) Blair and your government, very very close to the end of my life ... I'm not a difficult person. I am a simple man who just wants to live a simple life with his family," the tape showed the 62-year-old engineer as saying before masked men severed his head with a knife.

BAGHDAD (Reuters) - British hostage Ken Bigley has been beheaded in Iraq, three weeks after he was kidnapped by militants demanding the release of women held by U.S.-led forces, a video seen by Reuters showed on Friday.

Guerrilla sources in the rebel-held city of Falluja said earlier that Bigley, who was being held by a militant group led by alleged al Qaeda ally Abu Musab al-Zarqawi, was killed on Thursday afternoon in Latifiya, southwest of Baghdad.

In the video, seen by a Reuters witness in the office of a foreign news organization in Baghdad, the 62-year-old engineer was shown making a statement as six militants stood behind him, before one cut his head off with a knife.

The tape showed Bigley wearing an orange jump suit of the type worn by detainees in U.S. prisons including the detention center at Guantanamo Bay in Cuba.

Commenting on earlier reports of Bigley's death, a British Foreign Office spokesman told Reuters in London: "We cannot corroborate the reports ... We are in close touch with Mr. Bigley's family at this difficult time."

Britain's Sky TV, however, quoted British government sources as saying Bigley had been killed.

Bigley was kidnapped in Baghdad on Sept. 16 by the Tawhid and Jihad Group, along with two American colleagues who were beheaded soon afterwards. Militants have launched a spate of kidnappings as part of attempts to undermine the U.S.-led coalition ahead of January elections.

The kidnappers had demanded U.S.-led forces in Iraq release women prisoners to spare Bigley's life. Washington says it holds only two women in Iraq, both top weapons scientists from the days of Saddam Hussein.